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Cost Reduction Strategies in Low-Cost Carrier Models: A Comparative Analysis with Global Network Airlines

A comparative analysis of cost-saving strategies in budget airlines vs. global carriers.

Olivia Smith
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Cost Reduction Strategies in Low-Cost Carrier Models: A Comparative Analysiswith Global Network AirlinesChoose one element of archetypal low-cost-carrier business model and Explain how it reduces cost compared with alarge international networkairline. Why do global network carriers not incorporate this element in their businessmodelAnswer 1: Porter five forces analysis is a framework for industry analysis and businessstrategy development. It draws upon industrial organization (IO) economics to derive fiveforces that determine the competitive intensity and therefore attractiveness of a market.In airline industry, the strongest force is “bargaining power of suppliers”. All the airlinecompanies are dependent on aviation fuel. Airlines fix the prices of their ticket on thebasis of global aviation fuel as major portion of expenses of airline industry consists ofoil bill.Airline industry has no control on the price of aviation fuel. The price of the

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Business Management

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